Jim Cramer began his analysis on athenahealth, Inc (NASDAQ:ATHN) in his show Mad Money and he in the usual style compared athenahealth, Inc (NASDAQ:ATHN)’s position as a battle between bulls and bears.
Here is what Cramer has stated:
“When I hear the term battlegrounds, I don’t think of Gettysburg, what comes to my mind are hotly contested stocks that are caught in the crossfire between the bulls and the bears. Stocks like Athenahealth ATHN”
Cramer mentioned about the fall of athenahealth, Inc (NASDAQ:ATHN) from $204 in early March to $128 on Monday. He also stated that the devastating presentation given by David Einhorn roughly a month ago added to the injury. Einhorn said that the stock was overvalued and he also pointed out on a lot of other issues. Here is what Cramer said about the presentation:
“That was a characteristically brutal presentation from Einhorn, knocked the stock down from $126 to $109 in a single session.”
Cramer seemed to have a lot of questions as he invited athenahealth, Inc (NASDAQ:ATHN)’s Chairman, President and CEO, Jonathan Bush.
Cramer began the discussion with Bush mentioning about the book Bush wrote “Where does it hurt?” and he specifically pointed to the chapter about Epic where Bush projected it as an evil empire and Cramer also asked to explain the comparison mentioned in the book.
Bush immediately replied stating that Epic isn’t evil and it’s just an enterprise software company and he also said that enterprise software was falling down as a business model across all the sectors. So he said that a cloud based model would help all the stakeholders of a business to be on the same network rather than building small islands of software and that is what athenahealth, Inc (NASDAQ:ATHN) is helping them with.
Bush also explained that with cloud based model in health care would unite the doctors, patients and hospitals and bring better visibility so that everyone can shop via a single platform and that is what enterprise software lacks, so everybody is on their own and totally disconnected.
Cramer then pointed towards the report in the presentation made by Einhorn that pointed towards the declining earnings estimates and declining revenues, which totally seems out of sync with the $1000 price target set by Bush. So Bush replied that he was trying to be facetious and he stated in the interview that he acknowledges the fact that CEOs don’t say what the companies should be worth.
Bush also explained the potential athenahealth, Inc (NASDAQ:ATHN) has got with more than 95% of the doctors still on enterprise software platforms. Cramer kept asking him about the declining revenues and he politely said that he doesn’t look at ultimate earnings as a way of running the company and he believes in increased re sale of products every year which was not very evident.
On a whole Cramer focused on Einhorn’s presentation mostly and even the questions related to the book Bush wrote were related to Einhorn’s presentation and Epic.
athenahealth, Inc (NASDAQ:ATHN) has recovered since the Einhorn’s presentation and was trading at around $124 yesterday.